Israeli court filings show that dozens of lawsuits have been filed against Israeli binary options companies by former clients in the United States, the United Kingdom, Australia, New Zealand, South Africa, Denmark, Sweden, the Netherlands, Switzerland, the Czech Republic, India, Belize and Singapore, as well as numerous alleged victims of investment fraud from Israel itself.
While it is difficult to determine precisely how many such lawsuits have been filed — since Israel’s courts database is not searchable by keyword — The Times of Israel estimates the number to be between 50 and 100 in the last two years.Some of these lawsuits are ongoing, while others have ended in a settlement.
Despite the slew of civil lawsuits, and an ongoing stream of US Justice Department prosecutions of Israeli binary options fraudsters, there is little indication that Israeli police are actively investigating alleged binary options and related investment fraud. One investigation that was commenced in 2017 resulted in police determining that the owner of a binary options company was not guilty of any wrongdoing, according to a document seen by The Times of Israel.
Whistleblowers who have spoken to Israeli police about investment fraud perpetrated from Israel have described the police reaction as either indifferent or seemingly daunted by the complexity of an investigation that would involve multiple jurisdictions and documents in foreign languages.
Yoram Fay, an attorney who has sued several Israeli binary options companies on behalf of plaintiffs abroad, believes that civil lawsuits can provide some relief to the alleged victims.“I encourage people to sue in Israel, because none of my lawsuits till today have reached the stage where the judge had to deliver a verdict. At a certain point the defendants understood that it was in their interest to pay up. It’s worthwhile to sue because in the end it is possible to get your money back.”
The binary options industry flourished in Israel for a decade before it was outlawed via Knesset legislation in October 2017, largely as a result of investigative reporting by The Times of Israel that began with a March 2016 article entitled “The wolves of Tel Aviv.”
At the industry’s height, hundreds of companies in Israel were engaged in the widely fraudulent industry, which employed thousands and allegedly fleeced victims worldwide out of billions. The unscrupulous firms would dupe victims into believing that they were investing successfully and earning money, and encourage them to deposit more and more into their accounts, until the company eventually cut off contact with the investor and disappeared with all or almost all of their money.
Many of the fraudulent operatives have since moved their operations abroad, or switched to other scams while continuing to operate from Israel. The vast majority of the perpetrators have enriched themselves at the expense of victims around the world while enjoying impunity and suffering little social stigma.
Several binary options-related lawsuits recently filed in Israeli courts. In almost every case, the plaintiffs traded on a website and spoke to people in a call center that they claim defrauded them. The most difficult task for most of these plaintiffs was to associate an Israeli company or individual with the website that allegedly defrauded them since binary options and forex companies often go to great lengths, using offshore companies, generic IP addresses and fake names, to hide the identities of their operators. Most of the plaintiffs finally decided whom to sue after a huge amount, sometimes months’ worth, of detective work, and in almost every case the defendants’ first line of defense was that the plaintiffs had made a mistake and sued the wrong people.